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Value Creation in the Product Development Process
by
James P. Chase
Bachelor of Science, Aerospace Engineering and MechanicsUniversity of Minnesota, 1999
Bachelor of Arts, English Language and LiteratureUniversity of Minnesota, 1999
Submitted to the Department of Aeronautics and Astronauticsin Partial Fulfillment of the Requirements for the Degree of
Signature of Author ..........................................................................................................................................................Department of Aeronautics and Astronautics
December 21, 2001
Certified by .......................................................................................................................................................................Edward M. Greitzer
Associate Department Head, Department of Aeronautics and AstronauticsThesis Supervisor
Certified by .......................................................................................................................................................................Hugh L. McManus
Principal Research Engineer, Lean Aerospace InitiativeThesis Supervisor
Certified by .......................................................................................................................................................................John J. Deyst, Jr.
Professor, Department of Aeronautics and AstronauticsThesis Supervisor
Accepted by ......................................................................................................................................................................Wallace E. Vander Velde
Professor of Aeronautics and Astronautics Chair, Committee on Graduate Students
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Written in the shadow of the September 11th terrorist
attacks, this thesis is dedicated to the victims in the
hope that the knowledge herein will contribute, in its
fashion, to lasting peace and security.
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Value Creation in the Product Development Process
by
James P. Chase
Submitted to the Department of Aeronautics and Astronautics on December 21, 2001in Partial Fulfillment of the Requirements for the Degree of
Master of Science in Aeronautics and Astronautics
ABSTRACT
A framework for value creation in the product development process is proposed as an aid forvisualizing and understanding value in complex processes and thus guiding resource allocation,process measurement, and process improvement. The framework is based on informationreceived from a variety of industry site visits and stresses process value. It defines process valuein product development as the approach of the enterprise in creating a desired product for thecustomer, continuing profit for the shareholder, and lifetime satisfaction for the employee. Thefour principal elements of the framework include tasks, resources, environment, andmanagement. These elements are further divided into several levels of value attributes, affordinga constructive view of value creation.
Several sets of data provide observations on portions of the framework. An analysis of industrywork breakdown structures revealed (i) tasks contribute markedly different types of value amongprograms, implying that no single definition of "the product development process" exists at adetailed level, (ii) lower level tasks contain more enabling activities, supporting the notion thatimprovement efforts should focus at a detailed level of the process, and (iii) programstransitioning to lean include more tasks emphasizing cost/schedule, advocating that companiesshould recognize cost/schedule more explicitly. A survey showed that engineers spend over 70%of their time on communication-related activities, suggesting that achieving effectivecommunication should be a priority of process improvement efforts. Finally, programs usingearned value management had greater consistency and fewer delayed tasks than programs whichtracked task completion dates only.
Thesis Supervisors: Edward M. GreitzerH.N. Slater ProfessorDepartment of Aeronautics and Astronautics
Hugh L. McManusPrincipal Research EngineerLean Aerospace Initiative
John J. Deyst, Jr.ProfessorDepartment of Aeronautics and Astronautics
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I expect to pass through life but once, if therefore there
be any kindness I can show, or any good thing I can do
to any fellow being, let me do it now, and not defer or
neglect it, as I shall not pass this way again.
– William Penn
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ACKNOWLEDGEMENTS
As suggested later in the thesis, graduate research is similar to the product development process.The core areas of tasks, resources, environment, and management were as critical in my researchas they are in the product development process. This analogy helps to recognize the importanceof others in the success of research. Resources, environment, and management are linked withfaculty advisors, industry members, colleagues, friends, family and faith. Thus, the successfulcompletion of this work is a testament to the many hours that others have contributed. I amgrateful for these contributions and consider myself fortunate for having the opportunity to workwith those listed here.
I am especially thankful to my three advisors (Ed Greitzer, Hugh McManus, and John Deyst),Earll Murman, Simon Walter-Hansen, and the Lean Aerospace Initiative. Ed instilled a level ofrigorousness that will follow me well beyond this research. Hugh provided considerable insightfrom his knowledge of lean practices. John is responsible for the consistent theme of riskreduction that pervades the thesis. Earll went well beyond his available time to provide adviceon the research process. Simon donated many hours (and then some) to help with the onlinesurveys. And, the Lean Aerospace Initiative (LAI) provided my research funding.
LAI Faculty and Staff
I would like to thank the many members of LAI who provided intellectual guidance. KirkBozdogan and Deborah Nightingale inspired the work on communication. Al Haggerty andJoyce Warmkessel offered insight on the management sections. Eric Rebentisch provided initialhelp on the research framework. Tom Shields “located” funding for my academic pilot study.And, Frances Meale and Robin Palazzolo’s weekly assistance was invaluable.
Industry Members
The participation of industry was an essential component of the research. Many industrymembers gave their time through interviews, surveys, and discussions. In particular, I amindebted to Adi Choudri, Ed Harmon, and Ed Peterson for their continued support and advice.Others also provided considerable time, including Jim Ayers, Bill Carrier, Sarah Hotaling,Mukesh Luhar, Russell Parker, George Reynolds, Kevin Smith, Kerry Sugimoto, Robert Tock,and Jeff Wessels. Finally, former colleagues, Josh Bernstein and Tyson Browning, successfullybridged the gap between industry and academia in their support of the research.
Fellow Graduate Students
My LAI colleagues were a source of inspiration and support. For example, I will never be ableto appropriately reference the ideas contributed by Rob Dare, Rich Millard, and Alexis Stanke. Iam also thankful to the members of my pilot study, including Sandra Kassin-Deardorff, JacobMarkish, Michelle McVey, Rhonda Salzman, Carissa Tudryn, and Mandy Vaughn. In sum, eachof these colleagues, and now friends, contributed to a positive and memorable experience.
Friends, Family, and Faith
The expertise from LAI and industry means little, however, without a solid foundation of friends,family, and faith. In addition to those referenced above, I would like to give special thanks to
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David Nistler for his review of several thesis chapters, Monica Herlofsky for her ideas on thecommunication survey, and Breanna Ahmad for the continued, yet always unexpected, deliveriesof “high-calorie cuisine.” My parents (Claire and Pat) and sister (Jeanne) have contributedcontinual patience, guidance, help, and understanding. They have proven to be constant rolemodels that I continue to look up to. Finally, God is ever present and ultimately my guide forpast, present, and future work.
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TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION AND EXECUTIVE SUMMARY.................................................................13
1.1 MOTIVATION AND PROBLEM STATEMENT..................................................................................................13
1.3 RESEARCH OVERVIEW ...............................................................................................................................14
1.4 SUMMARY OF THESIS CONTRIBUTIONS ......................................................................................................15
CHAPTER 2: THE LEAN PHILOSOPHY .........................................................................................................17
2.1 ORIGINS OF LEAN.......................................................................................................................................17
3.1.4 Test & Evaluation ............................................................................................................................27
3.1.5 Production .......................................................................................................................................28
3.1.6 Support and Operations...................................................................................................................28
3.2 IMPORTANCE OF PRODUCT DEVELOPMENT ................................................................................................29
3.3 COMPLEXITY AND THE THREE DIMENSIONS OF PRODUCT DEVELOPMENT ................................................31
3.3.1 The Product......................................................................................................................................32
3.3.2 The Process......................................................................................................................................32
3.3.3 The Organization .............................................................................................................................33
3.4 PERVASIVE COMMUNICATION IN PRODUCT DEVELOPMENT ......................................................................33
3.4.1 Communication Architecture...........................................................................................................34
3.4.2 Collaborative Design and Development..........................................................................................34
3.5 FUNDAMENTAL METRICS OF THE PRODUCT DEVELOPMENT PROCESS.......................................................35
4.1.2 Process Measurement ......................................................................................................................41
4.1.3 Process Improvement.......................................................................................................................41
4.2 WHAT IS VALUE? .......................................................................................................................................41
4.3 VALUE IN PRODUCT DEVELOPMENT ..........................................................................................................44
4.3.1 Value Engineering and Value Analysis (VE/VA).............................................................................44
4.3.2 Lean Product Development .............................................................................................................47
4.4 TOOLS FOR QUANTIFYING VALUE IN PRODUCT DEVELOPMENT ................................................................47
6.2.3 Value Attributes ...............................................................................................................................68
6.2.5 Relationships Between Tasks and Value Attributes.........................................................................69
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6.2.6 Data Analysis...................................................................................................................................69
6.2.7 Quantifying Task Value ...................................................................................................................69
6.2.8 Data Analysis...................................................................................................................................71
6.3 METHODOLOGY FOR RESOURCES RESEARCH ............................................................................................71
6.3.1 Site Visits and Interviews.................................................................................................................72
6.3.2 Interview Notes and Literature Review ...........................................................................................72
6.4 METHODOLOGY FOR ENVIRONMENTAL RESEARCH ...................................................................................72
6.4.1 Communication Survey ....................................................................................................................73
6.4.2 Data Analysis...................................................................................................................................73
6.4.3 Case Studies on Successful Environments .......................................................................................74
6.4.4 Data Analysis...................................................................................................................................74
6.5 METHODOLOGY FOR MANAGEMENT RESEARCH........................................................................................74
6.5.1 Task Completion Data .....................................................................................................................75
6.5.2 Data Analysis...................................................................................................................................75
CHAPTER 7: ANALYSIS AND RESULTS ........................................................................................................77
7.1 TASK RESEARCH ........................................................................................................................................77
7.1.1 Analysis of Work Breakdown Structures .........................................................................................77
7.1.2 Analysis of Industry and Academic Surveys ....................................................................................84
7.1.3 Discussion of Task Value.................................................................................................................88
A.2 PEOPLE .....................................................................................................................................................112
APPENDIX B: CASE STUDIES OF SUCCESSFUL TEAM ENVIRONMENTS .....................................118
B.1 “TWELVE DAYS OF AUGUST,” F-18E/F, BOEING ....................................................................................118
B.2 DEVELOPING NEW PRODUCTS TEAM, JET PROPULSION LABORATORY, NASA.......................................119
B.3 MISSION CONTROL CENTER, JOHNSON SPACE CENTER, NASA ..............................................................119
APPENDIX C: PILOT STUDY OF ACADEMIC RESEARCH ..................................................................121
C.1 METHODOLOGY OF ACADEMIC CASE STUDY...........................................................................................121
C.2 TASK VALUE ............................................................................................................................................122
C.3 TIME VERSUS TASK VALUE ......................................................................................................................124
C.4 RESULTS OF THE PILOT STUDY.................................................................................................................124
APPENDIX D: RESEARCH SURVEYS AND DEFINITIONS....................................................................125
D.1 INFORMED CONSENT FOR SURVEYS .........................................................................................................125
D.2 TASK SURVEY FOR MEASURING VALUE (INDUSTRY)...............................................................................126
D.3 ORIGINAL VALUE ATTRIBUTE DEFINITIONS USED IN INDUSTRY TASK SURVEYS ....................................127
D.4 TASK SURVEY FOR MEASURING VALUE (ACADEMIA) .............................................................................129
D.5 SURVEY FOR COMMUNICATION IN THE AEROSPACE INDUSTRY ...............................................................130
D.6 DEFINITIONS FOR COMMUNICATION SURVEY ..........................................................................................131
FIGURE 1.1: STRUCTURE FOR "VALUE CREATION IN THE PRODUCT DEVELOPMENT PROCESS"....................................14
FIGURE 1.2: CONCEPTUAL FRAMEWORK OF THE PRODUCT DEVELOPMENT PROCESS ..................................................15
FIGURE 2.1: PRODUCT VERSUS PROCESS VALUE IN PRODUCT DEVELOPMENT .............................................................19
FIGURE 3.1: PRODUCT LIFECYCLE PROCESS (LAI, 1998) .............................................................................................26
FIGURE 3.2: TPM UNCERTAINTY IN THE LIFECYCLE PROCESS .....................................................................................29
FIGURE 3.3: LIFECYCLE COST COMMITTED (ADAPTED FROM FABRYCKY AND BLANCHARD, 1999) ............................30
FIGURE 3.4: MANAGING COMPLEXITY TO CREATE VALUE...........................................................................................31
FIGURE 3.5: PRODUCT PERFORMANCE VIA TECHNICAL PERFORMANCE MEASURES.....................................................36
FIGURE 3.6: MANAGING PERFORMANCE, COST, AND SCHEDULE UNCERTAINTY .........................................................38
FIGURE 4.1: CUMULATIVE CASH FLOW OF THE PRODUCT LIFECYCLE..........................................................................43
FIGURE 4.2: MEASURING VALUE (SHILLITO AND DEMARLE, 1992; TANAKA, 1973) ..................................................46
FIGURE 5.1: CONCEPTUAL FRAMEWORK FOR VALUE CREATION AND DELIVERY.........................................................53
FIGURE 5.2: FRAMEWORK FOR DELIVERING VALUE IN PRODUCT DEVELOPMENT........................................................56
FIGURE 6.1: DATA COLLECTION ACROSS THE FRAMEWORK ........................................................................................65
FIGURE 7.1: VALUE VERSUS TIME (TYPE OF TASK) ......................................................................................................87
FIGURE 7.2: VALUE VERSUS TIME (STUDENT SATISFACTION) ......................................................................................88
FIGURE 7.3: EFFECTIVENESS OF COMMUNICATION MODES ..........................................................................................92
FIGURE 7.4: TIME VERSUS VALUE OF COMMUNICATION MODES..................................................................................94
FIGURE 7.5: ESTIMATED VERSUS ACTUAL COMPLETION (A-2 & A-5) .........................................................................98
FIGURE 7.6: PRODUCT DEVELOPMENT VERSUS MANUFACTURING TASK COMPLETION................................................99
FIGURE 7.7: HISTOGRAM OF PRODUCT DEVELOPMENT TASK COMPLETION (A-2 & A-5) ............................................99
FIGURE 7.8: ESTIMATED VERSUS ACTUAL COMPLETION (SITE B-5)...........................................................................100
FIGURE 7.9: HISTOGRAM OF PRODUCT DEVELOPMENT TASK COMPLETION (B-5)......................................................101
FIGURE 7.10: TPM PLANNED PROFILE AND RISK REDUCTION (BROWNING, 2001)....................................................102
FIGURE C.1: PARTIAL DATA SET OF STUDENT RESEARCH..........................................................................................122
FIGURE C.2: CUMULATIVE VALUE OF STUDENT RESEARCH .......................................................................................123
FIGURE C.3: COMPARISON OF RESEARCH CASE STUDIES ...........................................................................................123
FIGURE C.4: ACTIVITY VALUE SUMMARY ..................................................................................................................124
FIGURE D.1: ONLINE TASK SURVEY FOR MEASURING VALUE (INDUSTRY)................................................................126
FIGURE D.2: ONLINE TASK SURVEY FOR MEASURING VALUE (ACADEMIA) ..............................................................129
FIGURE D.3: ONLINE SURVEY FOR COMMUNICATION IN THE AEROSPACE INDUSTRY ................................................130
FIGURE D.4: ONLINE SURVEY FOR MEASURING TECHNICAL UNCERTAINTY..............................................................133
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LIST OF TABLES
TABLE 3.1: DEFINITIONS OF THE PRODUCT LIFECYCLE PROCESS .................................................................................25
TABLE 4.1: VALUE DEFINITIONS FOR PRODUCT DEVELOPMENT...................................................................................45
TABLE 4.2: TOOLS FOR QUANTIFYING VALUE IN PRODUCT DEVELOPMENT.................................................................48
TABLE 5.1: PROPOSED ELEMENTS OF VALUE................................................................................................................51
TABLE 5.2: VALUE CONTRIBUTION OF TASKS TO ENTERPRISE VALUE .........................................................................58
TABLE 5.3: VALUE ATTRIBUTES OF PRODUCT DEVELOPMENT TASKS..........................................................................59
TABLE 5.4: VALUE CONTRIBUTION OF RESOURCES ......................................................................................................60
TABLE 5.5: VALUE CONTRIBUTION OF THE ENVIRONMENT ..........................................................................................61
TABLE 5.6: VALUE CONTRIBUTION OF THE MANAGEMENT APPROACH........................................................................62
TABLE 6.1: SITE KEY FOR DATA COLLECTION..............................................................................................................66
TABLE 6.2: METHODOLOGY FOR TASK VALUE .............................................................................................................67
TABLE 6.3: LIST OF WORK BREAKDOWN STRUCTURES COLLECTED ............................................................................68
TABLE 6.4: SURVEY PARTICIPANTS FOR MEASURING VALUE OF TASKS ......................................................................70
TABLE 6.5: METHODOLOGY FOR RESOURCE VALUE.....................................................................................................71
TABLE 6.6: INTERVIEWS ACROSS AEROSPACE PRODUCT DEVELOPMENT.....................................................................72
TABLE 6.7: METHODOLOGY FOR ENVIRONMENTAL VALUE..........................................................................................73
TABLE 6.8: COMMUNICATION SURVEY PARTICIPANTS .................................................................................................73
TABLE 6.9: SUMMARY OF CASE STUDY DATA ..............................................................................................................74
TABLE 6.10: METHODOLOGY AND MANAGEMENT VALUE ...........................................................................................75
TABLE 6.11: SOURCES OF DATA FOR TASK COMPLETION .............................................................................................75
TABLE 6.12: TECHNICAL UNCERTAINTY DATA ............................................................................................................76
TABLE 7.1: WORK BREAKDOWN STRUCTURE WORD ANALYSIS ..................................................................................78
TABLE 7.2: ANALYSIS OF WORK BREAKDOWN STRUCTURES .......................................................................................79
TABLE 7.3: PROPOSED RELATIONSHIPS BETWEEN TASK CATEGORIES AND VALUE ATTRIBUTES.................................80
TABLE 7.4: VALUE CONTRIBUTION OF TASKS FROM PROGRAMS AND PROCESSES .......................................................81
TABLE 7.5: ASSESSMENT OF LEAN PENETRATION IN PRODUCT DEVELOPMENT ...........................................................82
TABLE 7.6: COMPARISON OF PROGRAMS AND DETAILED PROCESSES...........................................................................83
TABLE 7.7: COMPARISON OF HIGH AND LOW LEAN PENETRATION ..............................................................................84
TABLE 7.8: VALUE CONTRIBUTION OF TASKS FROM INDUSTRY PROCESSES.................................................................85
TABLE 7.9: VALUE CONTRIBUTION OF TASKS FROM ACADEMIC RESEARCH ................................................................86
TABLE 7.10: CURRENT TIME ALLOCATION IN PRODUCT DEVELOPMENT (IN %)...........................................................91
TABLE 7.11: COMPARISON OF COMMUNICATION EFFECTIVENESS FOR ENGINEERS AND MANAGERS...........................93
TABLE 7.12: PROPOSED SUGGESTIONS FOR THE PRODUCT DEVELOPMENT ENVIRONMENT..........................................95
TABLE 7.13: PROGRAMS USED FOR EVALUATING SCHEDULE CONSISTENCY ...............................................................97
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Chapter 1: Introduction and Executive Summary
In 1996, Womack and Jones published Lean Thinking, which has become a primary guide for the
transition to lean within the aerospace industry. Their book suggested five lean principles that
enable corporations to reduce cost and time, while increasing quality. Aerospace organizations
have successfully responded to these recommendations in their manufacturing operations.
However, design, development, and testing activities have not yet achieved the same level of
success in implementing lean principles. Despite a number of lean initiatives in "above the shop
floor" activities, only a few improvements have been realized (McManus & Harmon, 2001).
The Lean Aerospace Initiative product development team has addressed several research projects
that explore the application of lean to complex system product development. For example, Slack
(1998) initially demonstrated that lean principles are applicable to product development,
Browning (1998) provided a useful approach for modeling cost, schedule, and performance, and
the 1998 LAI summer workshop identified seven types of information waste. These research
projects pointed out the need for an understanding of what value means in product development,
which is the subject of the thesis.
This chapter serves as an introduction and executive summary for value in product development.
The research motivation in the next section leads to a problem statement and set of key questions
that are addressed. The principal result of the thesis is a framework for value creation in the
product development process. In addition to the framework, some lessons are drawn from the
data collected and several insights are discussed.
1.1 Motivation and Problem Statement
The first principle of lean is specifying the value. During the product development process,
however, value is difficult to understand. The complexity of the process, distance from the final
customer, shifting market conditions, and uncertainties of technical performance, cost, and
schedule, all make a simple definition of value based on customer needs unworkable for process
improvement. Alternatively, concentrating on the cost of the product development process,
which makes up only a small fraction of the lifecycle cost, does not focus attention on the
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appropriate aspects. Hence, a framework for understanding the nature of value in product
development is desired. Such a framework should allow the decomposition of the complexities
of value and give insight into how various aspects of product development value might be
measured and improved. The framework should be supported by both qualitative understanding
of industry practices and quantitative data on the aspects of value defined in the framework.
1.2 Key Questions
Key questions to be addressed include:
• How is value defined during product development? How can value be quantified before the
beginning of the use life?
• Given the definition of value, how can one understand the product development process, in
order to find out how to best create this value? Are the existing tools adequate to do the job,
or are more advanced models needed?
• What metrics can be established to measure value during product development, and can they
be used in real circumstances?
1.3 Research Overview
The thesis structure is shown in Figure 1.1. The initial chapters explore the lean philosophy
(Chapter 2), the product development process (Chapter 3), and value (Chapter 4). These
chapters define the principal considerations for developing a framework of value creation.
Chapter 2:
Lean Philosophy
Chapter 3:
Product Development
Chapter 4: Value in
Product Development
Chapter 5: Framework
for Value Creation
Chapter 6:
Data Collection
Chapter 7:
Results
Chapter 8:
Summary
Figure 1.1: Structure for "Value Creation in the Product Development Process"
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The insight gained from the background material is then combined with a series of industry site
visits to produce the conceptual framework shown in Figure 1.2 and discussed in Chapter 5.
This framework, and its associated breakdown of value attributes, is a principal outcome of the
thesis. The four elements of the larger framework, explained in Section 5.4, include tasks,
resources, environment, and management. Although its validation is beyond the scope of the
research, several sets of data were acquired that provide insight on specific areas of the
framework.
Task 1
Task 2
Task n
Resources
Resources
Info.
Info.
Info. Risk
Risk
Risk
Process Value
Product $$
Resources
Performance
Schedule
ProductValue
Cost
Figure 1.2: Conceptual Framework of the Product Development Process
The scope and methodology of the data collection is presented in Chapter 6, which included
more than eighty interviews, four types of surveys, 15 work breakdown structures, and four sets
of task completion data. Its analysis, presented in Chapter 7, provides several observations
summarized in the next section on thesis contributions.
1.4 Summary of Thesis Contributions
1) The recognition of process value apart from product value. In manufacturing, value is
typically defined as a product meeting performance, cost, and schedule specifications.
However, in product development, it may be more useful to consider process value. Process
value can be defined as the ability to perform with maximum quality at minimum cost.
Intuitively, this can be thought of as the effectiveness of the process in reducing performance,
cost, and schedule uncertainty (Browning, 1998; Browning, 2001; Deyst, 2001). In product
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development, considering process value allows improvement even when the ultimate impact
on product value cannot be determined.
2) The value creation framework of Chapter 5. Its decomposition of the process into the
elements of tasks, resources, environment, and management aids the visualizing and
understanding value in complex processes. This understanding can in turn be used to assist
in resource allocation, process measurement, and process improvement.
3) Analysis of industry work breakdown structures (WBS’s). This analysis reveals that 85% of
tasks, as specified by the WBS, contribute to customer value via design, development, and
risk reduction activities. The WBS’s show great variety in product development processes,
illustrating the difficulty of defining a product development process at any but the highest
level. Most of the tasks in high-level WBS’s appear to contribute value directly to the
product; however, low-level (process) WBS’s show more supporting tasks. This supports the
idea (Browning, 1999) of analyzing product development at the lowest practical level.
4) A survey on communication. A high percentage of time in product development is spent on
communication-related activities (in comparison to isolated activities). This emphasizes the
importance of communication, particularly as it relates to process improvement. The survey
also showed that face-to-face or small group discussion is still the most effective means of
communication.
5) An analysis of four sets of task completion data. This showed that a rigorous approach to
managing the schedule (that is, earned value management) can reduce the number of tasks
behind schedule. This result suggests that it is possible to manage the timely completion of
product development tasks, leading to the realization of product value through an emphasis
on process value.
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Chapter 2: The Lean Philosophy
This chapter introduces the lean philosophy, including its origin, its five basic principles, and
several results from implementation efforts. Companies have historically pursued many
activities to increase corporate profits, including process changes such as standardizing workflow
and reengineering initiatives. The common theme among these activities was usually cost
reduction. In the last two decades, however, a new concept, lean, has been introduced to the
industrialized world. Unlike previous attempts directed at cutting costs, lean is directed at
maximizing value (Browning, 2001). It is the philosophy of continuous improvement of
corporate processes to maximize value given limited resources. This perspective emphasizes
delivering customer satisfaction. Although lean applies to all processes, most implementation
efforts have been directed at manufacturing. More recently, these efforts have broadened to
include other areas, such as product development. This chapter presents a brief review of lean
that includes several insights that apply to the study of value in product development.
2.1 Origins of Lean
Two decades ago, the U.S. automobile industry faced a crisis due to Japanese competition.
Japanese cars typically required half the effort to design and manufacture, yet contained fewer
than half the number of defects. U.S. executives maintained that this quality was specific to the
Japanese culture and could not be replicated in the U.S. However, a comprehensive survey of
automobile firms by Womack, Jones, and Roos (1990) changed that belief. Their book, The
Machine that Changed the World, brought to light a new method for product design and
manufacturing. This philosophy, later termed lean production, emphasizes flexibility and
customer value, rather than the batch and queue process of mass production. The method
originates at the heart of the Toyota Production System, which continues to be "hailed as the
source of Toyota's outstanding performance as a manufacturer" (Spear and Bowen, 1999).
The crisis of high costs and poor performance of U.S. automakers in the early 1980s led directly
to their desire to adopt lean practices. A few years later, the aerospace industry faced a crisis
with the end of the cold war and similarly pursued lean practices. As these two sectors of the
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economy strove to develop lean practices, it was quickly realized that the Toyota Production
System was not easily duplicated (Spear and Bowen, 1999). The system was not just composed
of tools and practices, but of a fundamental philosophy that made it enormously flexible and
adaptable. Womack and Jones (1996) explored this philosophy in their second book, Lean
Thinking, which discussed five key principles.
2.2 Lean Principles
In Lean Thinking, Womack and Jones (1996) proposed five central ideas to describe lean. These
principles are (i) specify value, (ii) identify the value stream, (iii) create continuous flow, (iv)
organize customer pull, and (v) pursue perfection. These principles are central to establishing a
lean enterprise and, in several instances, have been adopted verbatim by leading aerospace firms
as tactics for implementing lean.
2.2.1 Specify Value
The first lean principle is to precisely specify value. Womack and Jones (1996) define value as
"a capability provided to a customer at the right time at an appropriate price, as defined in each
case by the customer." This definition is useful for applications where the final product is
explicitly defined, such as manufacturing. For product development, however, it is less helpful.
In practice, lean assessments of product development tend to fall back on ad hoc
characterizations concerning which activities add value. Although simple applications of this
lean principle can often root out obvious wastes found in most product development processes,
optimization of the processes cannot be achieved without a more specific definition of value.
This idea is a primary motivation for this research on value in product development.
As applied to product development, the first principle highlights an important conclusion. An
innovative environment requires two types of value: product value as described by Womack and
Jones (1996) and process value, which is largely untouched in value literature. The difference
between these types of value is illustrated in Figure 2.1.
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Lifecycle Activities
Market Introduction
Decreasing Uncertaintyin Product Development
Estimated
Actual
Process Value
Product Value
Figure 2.1: Product versus Process Value in Product Development
Figure 2.1 shows product value as the estimated and later actual value of the product as it
progresses through product development and into production. When Womack and Jones define
value as "a capability," they are defining the value of the physical product. In production, this is
an appropriate definition as little doubt exists. In contrast, product development (as discussed in
Chapter 3) embodies enormous uncertainty.1 The product development process decreases this
uncertainty, which leads to a definition of process value as the decreasing uncertainty that
activities provide.
Process value and product value are thus not necessarily correlated. A good process that
efficiently reduces uncertainty will not always achieve the program objectives. An example of
this is the Iridium satellite constellation. Despite using modern processes and arriving on
schedule and under budget, it drove its parent company into bankruptcy due to an insufficient
customer base. This uncertainty in product value has prompted some industry experts (e.g.,
Reinertsen, 1997) to caution against a specific set of best practices.
1 Uncertainty, as defined here, is the variance in performance, cost, and schedule of the expected product.
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2.2.2 Identify the Value Stream
The value of a product is determined through a sequence of actions that eventually delivers the
product to the customer. This sequence forms the value stream, which the Lean Aerospace
Initiative (1999) has characterized as "the sum of the specific actions performed on a product to
carry it from raw material state into the hands of the customer." Womack and Jones (1996) point
out that the concept of a value stream is slightly different than the value chain, originally
introduced by Porter (1980), who emphasizes shorter sequences of activities designed to fulfill
near-term objectives. Identifying and evaluating the value stream has proven useful to industry
(Millard, 2001). Millard describes value stream analysis and mapping (VSA/M) as the
understanding and improvement of business processes using illustrations to show the product
flow towards a final outcome.
The primary benefit of VSA/M lies in its ability to arrange the process into specific, sequential
actions that can be analyzed and improved. Since an understanding of value creation is at the
heart of this improvement, it follows that the creation of value must also be decomposed to the
level of actions.
2.2.3 Create Continuous Flow
Once the value stream has been identified, the process of continuous flow can be introduced.
Continuous flow, as characterized by one industry site, is "the progressive achievement of tasks
that transform (with no stoppages, backflows, or unnecessary work) relatively raw material or
information into a customer desired product or service." Henry Ford introduced this idea in
1913, when he switched to continuous flow for the Model T and successfully reduced the
assembly effort by 90% (Womack and Jones, 1996). Womack and Jones use Ford's example to
state that "tasks can almost always be accomplished much more efficiently and accurately when
the product is worked on continuously." Moreover, they suggest that getting value to flow faster
"exposes hidden waste in the value stream." The concept of continuous flow may be applied in
all phases of the product lifecycle. Unfortunately, this concept has not yet been introduced in
many areas of industry. For example, McManus and Harmon (2001) have reported that 62% of
the product development tasks they examined were found to be idle at any given time in a
21
detailed member study. This statistic is in line with their other findings from kaizen events that
show 50 to 90% idle time.
Continuous flow is probably the most important aspect of value creation. Assuming that product
development follows the historical path of production, continuous flow represents the next major
leap in process improvement. Organizations that successfully implement continuous flow in
design, development, and testing activities will obtain large reductions in time and cost. Thus,
an effective definition of value should embrace the concept of continuous flow.
2.2.4 Organize Customer Pull
The fourth principle is pull, which "is a system of cascading instructions from a downstream
customer to upstream in which nothing is produced by the upstream supplier until the
downstream customer signals a need" (Womack and Jones, 1996). Sales forecasts do not drive
production and instead products are produced as customers signal their desire. This lets
customers pull what they need rather than providers pushing unwanted products.
To apply pull, Toyota created an information and production control system (Cochran, 2000). At
the heart of the system are kanban cards that signal what to produce and when to produce it.
These cards control the pace and level of production, eliminating run size delay in
manufacturing. In product development, the cards are sometimes used to signal the need for
specific information. This concept has not generally been applied in the aerospace industry,
where product development is far from achieving the level of customer pull found in Toyota
(McManus and Harmon, 2001).
2.2.5 Pursue Perfection
The final step in achieving a lean enterprise is pursuing perfection. Pursuing perfection implies
process improvement is never done and increases in efficiency can be achieved repeatedly. For
example, industry has successfully increased efficiency in some processes by upwards of 30%
each time they revisit a process (Womack and Jones, 1996). Womack and Jones also argue that
transparency, or unrestrained access to data, is the most important aid to perfection and that it
creates an environment where it is easy to discover better ways to create value.
22
2.3 Examples of Lean Implementation
Womack, Jones, and Roos (1990) originally presented a few illustrations of lean implementation
from a small number of industry sectors. Since then, there have been many successful
applications of lean, particularly in the production of durable goods. The results of these efforts
have rippled through the economy, motivating Postrel (2001) to write that lean is responsible
"for most of the dampening of the business cycle" experienced in the last decade.
Examples in manufacturing include the Ford Motor Company, which is realizing "major
improvements to culture, cost and order to delivery time" at its Chicago assembly plant by using
new infrastructure and value stream mapping tools (Fowler, 2001). The Department of Defense
invested $96 million in several lean projects and has documented a two to one return (LAI,
1999). The improvements have included a 50% reduction in microwave power module (MPM)
costs, 40% reduction in AMRAAM missile cycle time, and an $18 million price reduction on the
C-17 main landing gear pod and cargo door. Other examples include a turnaround of a
Lockheed Martin facility in Georgia that was credited, in part, to the use of lean initiatives
(Squeo, 2000), and a European plant in Augsburg that has now been designated a DASA Centre
of Excellence, following the implementation of lean engineering (Cook, 2000). The F-16
program also experienced substantial savings, including 50% less floor space and 60-80% less
cycle time with the use of lean (Lewis, Norris, & Warwick, 2000). These savings have even
expanded beyond the prime contractors. At Boeing, Wichita, a web-based customer pull system
"saved hundreds of millions of dollars" in reduced inventory ("Informed Innovation," 1999).
The success of lean manufacturing techniques has spurred the industry to introduce lean to the
product development phase as well. For example, Northrop Grumman has organized 24 lean
initiatives above the shop floor (Cool, 2001), which made a direct impact on "enhanced
competitiveness and financial performance." Perhaps one of the best examples is the F/A-18 E/F
aircraft (winner of the Collier Trophy), which was produced below cost, on-schedule, and with
comparatively superior performance (Cool, 2001). Although lean was not formally
implemented, Stanke (2001) has suggested that the program incorporated many aspects of a lean
enterprise in its development phase.
23
Despite these improvements, lean is not fully implemented. The Lean Aerospace Initiative
(1999) surveyed industry leaders regarding the extent of lean implementation in the aerospace
industry. The result showed that less than 50% of the activities in each business area had
participated in improvement efforts. In particular, lean implementation efforts had been
attempted in less than 20% of product development activities. Moreover, the majority of sites
interviewed believed that this improvement is only the tip of the iceberg. One reason for the
delayed application of lean is the difficulty in translating lean from the manufacturing
environment to the product development process.
2.4 Summary
The lean philosophy is not just a single-use "solution" to fix current corporate problems. Rather,
lean is a lifelong philosophy of increasing customer, employee, and shareholder value by more
efficiently producing products desired by the customer. At the heart of lean is an understanding
of the creation of value, which serves as a primary motivation for this research. Value is
traditionally considered to be the value of the product, but in product development, it is more
fruitful to consider the value of the process. Another insight into value creation comes from
VSA/M, where decomposition of the process into specific actions suggests that an effective
value methodology will similarly partition the process. There is also potential for continuous
flow to improve the product development process. Finally, this chapter illustrated that most of
lean success has been in production techniques, in contrast to product development where the
lean principles have been found difficult to implement.
24
Chapter 3: Product Development Overview
In considering value creation in product development, it is necessary to explore the product
development process in a rigorous fashion. This chapter is thus devoted to the product
development process, consisting of the preliminary design, detailed design, and test & evaluation
phases of the product lifecycle. The influence of product development on lifecycle cost is
discussed, and lean theory is found to be a useful process improvement framework. A primary
challenge in implementing lean is seen to be the difficulty in understanding value in the complex
environment of aerospace product development. This complexity exists on three levels
(product, process, and organization), which must be addressed simultaneously.
3.1 Introduction to the Product Lifecycle
The product lifecycle is the identification, development, and production of new products to fulfill
changing customer needs. The lifecycle is described in Table 3.1 from several academic and
industry sources. The table illustrates the three primary elements. Concept development is the
identification of customer needs and working with the customer to produce suitable design
requirements. Product development consists of the design and testing phases. Production is the
manufacturing of the product for delivery and support to the customer. Although these elements
are shared by most of the industry, some products are created in such limited quantities that the
production phase is unnecessary. In an organization visited, where this occurred, the use of lean
terminology was non-existent, demonstrating how lean has flowed from production into product
development.
Table 3.1 illustrates the definition of product development used in this research, which
emphasizes the preliminary design, detailed design, and test & evaluation phases of the product
lifecycle. This characterization was chosen because it highlights the period between the contract
with the customer and resulting build-to package. Since it is assumed that the most appropriate
product requirements have been chosen, this research addresses the challenge of satisfying the
specified requirements via the product development process.
25
Table 3.1: Definitions of the Product Lifecycle Process
Rosenau,
2000
Ulrich et al,
1995LAI, 1998 Site A, 20002 Site D, 20002 Site E, 20002 This
Research
Customer Needs
Analysis
Advanced
Studies
Define Mission
Requirements
Define Concepts
Co
nce
pt
Dev
elo
pm
ent
Fuzzy
Front End
Concept
Development
System
Definition
Customer
Needs
Develop Concept
Preliminary
Analysis
Concept
Development
System Level
Design
Preliminary
Design
Preliminary
Design
Perform Preliminary
Definition
[Product]
Definition
Preliminary
Design
Detailed
Design
Detailed
Design
Perform Detailed
Definition
Design Detailed
Design
Pro
du
ct D
evel
op
men
t Stages &
Gates
Testing and
Refinement
Fabrication,
Assembly,
Integration,
& Testing
Product
Development
Build First Test
Article
Development Test and
Evaluation
Pre-profit
Sales
Production Production
Pro
du
ctio
n
Continued
Sales
Production
Ramp-up
Production Production
Support
Operations
Support and
Operations
An organization (E) visited in the course of this research has described the product lifecycle as
the "categorization of everything that should be done to accomplish a project into distinct phases,
separated by control gates. Phase boundaries are defined so that they provide more-or-less
natural points for go/no-go decisions." Typically, at the end of each phase there is a review by
the organization to ensure the program is meeting performance, cost, and schedule objectives.
These reviews establish intermediate checkpoints through which all new products must proceed.
The Lean Aerospace Initiative (1998) further refined their framework as shown in Figure 3.1.
The pyramid is illustrative of the increasing information generated from the program. The
information flow is tracked, with each step using internal inputs (the outputs of previous steps)
and external inputs (constraints, common practices and standards, etc.) to produce a set of
products passed to the next level. Risks are also considered at each step in this model. Only the
2 The organizations visited are labeled A-F (see Chapter 6), and are not identified pursuant with LAI guidelines.
26
highest level of the model is shown, and its expanded version includes additional detail not
depicted here (LAI, 1998).
(Design Risk)
(Manufacturing Risk)
(Performance Risk)
(Operational Risk)
DetailDesign
Customer Requirements
ConstraintsStrategies Systems Requirements
ProgramAttributes Design To
Build To
Qual Design
DesignStandards
ProductionStandards Hardware
SystemDef’n
PreliminaryDesign
FAIT
Production
Time
Figure 3.1: Product Lifecycle Process (LAI, 1998)
For this research, six phases in the product lifecycle are considered, as described in the following
subsections. The phases selected are not a unique definition of the process. Rather, their
selection is intended to provide the greatest clarity to the reader. The lifecycle phases are (i)
concept development, (ii) preliminary design, (iii) detailed design, (iv) test & evaluation, (v)
production, and (vi) operations & support.
3.1.1 Concept Development
Concept development includes the initial identification of the customer needs and the conversion
of those needs into product requirements and specifications. For example, one organization (F)
that participated in this research is heavily involved in the conceptual development of military
aircraft and unmanned vehicles. They initiate the development effort by translating the needs of
the military into product specifications that can be used for design.
This phase of the product lifecycle process initiates the architecture of the "technical baseline."
The resolution of the technical baseline is increased throughout the development process to
include functional and performance specifications for hardware, software, information items, and
Tsai, Wenpin. "Social Capital, Strategic Relatedness and the Formation of Intraorganizational Linkages."
Strategic Management Journal 21, 2000.
Ulrich, Karl T. and Steven D. Eppinger. Product Design and Development. NY: McGraw-Hill, 1995.
Waltham, D. “DNP Overview.” Presentation at the NASA Jet Propulsion Laboratory, Pasadena, 2000.
Warfield, John. Societal Systems: Planning, Policy, and Complexity. NY: John Wiley & Sons, 1976.
Webster’s New Collegiate Dictionary. Merriam-Webster Online. http://www.m-w.com/home.htm, 2001.
Webster’s New Collegiate Dictionary. Springfield: G. & C. Merriam, 1956.
Wessels, J. "Managing Knowledge." Presentation at the LAI Plenary. Cambridge. March 2000.
Womack, James P. and Daniel T. Jones. Lean Thinking: Banish Waste and Create Wealth in Your
Corporation. New York: Simon & Schuster, 1996.
Womack, James P., Daniel T. Jones, and Daniel Roos. The Machine that Changed the World: The Story
of Lean Production. New York: Harper, 1990.
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Appendix A: Discussion of Resource Value
Thompson and Strickland (1998) describe the value of resources as corporate strengths and
capabilities, which they suggest include the following abbreviated list.33
• Valuable human assets – an experienced, capable, or talented workforce
• Valuable physical assets – state-of-the-art plants, equipment, or software
• A skill or important expertise – technological or manufacturing know-how
These areas correspond with people, tools, and knowledge, as the ingredients that flow into
product development activities. The elements are not independent, since knowledge is often
considered a mixture of people and tools, residing as either tacit knowledge in the workforce or
explicit knowledge within tools. The discussion presented here stems from a series of
interviews. The interviews were conducted with several product development teams (as
described in the previous chapter), and the majority of the results stem from three programs that
were given “carte blanche” (as stated by one program manager) for obtaining program resources.
A.1 Knowledge
“The most valuable assets of the 20th century were its production equipment. The most
valuable assets of the 21st century will be its knowledge workers and their productivity.”
– Peter Drucker
The growing complexity of product development has led to knowledge as the “key asset whose
exploitation will determine success for many firms” (Miles, 2000). Knowledge is the “insights
and context from the mind - what the knower knows,” and it exists at the integration of people,
process, and technology (Wessels, 2000). Furthermore, it is seen as an “essential ingredient for
reducing lead times and maintaining the highest quality standards” (Hammersley et al, 1999).
33 The entire list includes organizational assets, intangible assets, competitive capabilities, organizational
achievement, and corporate alliances, which are considered less relevant to the task level of product development.
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Despite the importance of knowledge, however, “research on how organizations recognize,
develop, and transfer knowledge is still in its infancy” (Rulke et al, 2000). Moreover, knowledge
in the aerospace industry has come to a critical period. Due to downsizing and retirement, many
thousands of jobs have been lost (Wessels, 2000). Experience has significantly decreased and
many engineers are nearing retirement. For these reasons, several aerospace companies have
begun to invest in knowledge management, which is the development of tools to encourage
collaboration and capture the tacit knowledge of employees.
A.2 People
The value of employees, however, is not measured simply by their knowledge, but by a variety
of factors that contribute innovation as well as experience. Based on the relevant literature and
interviews, five attributes were identified to describe organizational value and are discussed
below.
A.2.1 Proficiency
Product development in the aerospace industry requires significant technological knowledge to
remain proficient. Thus, it is not only important to initially select competent employees, but to
provide training to maintain their skills and knowledge. The Air Force (1996) expands this
sentiment to include quality, stating that “education and training are essential to implementing
quality.” The product development teams visited all had high levels of proficiency and usually
years of experience. The one exception mentioned a few times was that design engineers “do not
have insight on cost savings and may miss the big picture.” This corresponds with earlier
research, which identified a lack of emphasis on cost savings at the detailed level of process.
A.2.2 Diversity
“I’m not talking about trying to cultivate generalists… To help engineers develop
expertise in their core field, we need to provide them with diverse experience in that
sector and in peripheral sectors.” – Vice President of Research and Development34
34 Quotation is from Sobek (2000).
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A number of program managers and industry experts have stressed the importance of diversity.
Rosenau (2000) and Trott (1998) include a “diverse range of skills” as a necessary characteristic
of employees. In light of this, the programs visited made determined efforts to get the “best
people with diverse experience.” Diversity serves not only as a source of new ideas, but more
importantly it increases cross-functional cooperation. For example, technology gatekeepers,
described by Allen (1977), have led to better product performance due to their extensive
communication networks. In industry, this trait was observed in design engineers, who generally
maintain good contacts for help in answering design, analysis, and manufacturing questions.
In terms of achieving a balance between proficiency and diversity, Iansiti (1998) conducted a
study in computer mainframe development. He found that, “by and large, projects staffed
mainly by members with more than 2 full generations of experience did not perform as well as
those with some lesser amount of experience.” Thus, he concluded that some diversity is
necessary at the expense of increased depth.
A.2.3 Empowerment
“Never tell people how to do things. Tell them what to do and they will surprise you
with their ingenuity.” -General George S. Patton, Jr. U.S. Army
As discussed earlier, empowerment is one of the tenets of lean theory. The Lean Aerospace
Initiative (1999) and Trott (1998), among others, have emphasized its importance. In the
programs visited, this was usually evident from the delegation of responsibility, accountability,
and authority (RAA) to the employees. Responsibility represents the assignment of a specific
task, accountability is ensuring the quality of the task, and authority is the right of an individual
to take the necessary actions required to complete the task. In many instances, organizational
empowerment was successful. However, several engineers mentioned the loss of mentorship,
which is due to a combination of increased empowerment and downsizing in the industry.
A.2.4 Mentorship
Even as empowerment increases in the aerospace industry, mentorship is quickly disappearing.
These two attributes, however, should not be considered opposites. The best example of their
synchronous implementation can be found at Toyota. Toyota traditionally relies on its employee
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base to anticipate and solve most problems. However, this process does not happen alone.
Everyone at Toyota has a sempai (or mentor) who is not their boss (Sobek, 2000). Sobek writes
that supervisors actively train their engineers regarding many technical and non-technical issues.
Supervisors are “working team leaders,” which maintains employee empowerment but provides
help as necessary. Unfortunately, this type of mentorship is costly, and even in the model
programs visited, managers felt that the money is simply not available.
A.2.5 Leadership
The final component of organizational value is providing the necessary leadership in key
positions. At Toyota, the chief engineer is the integration specialist and “totally responsible for
the vehicle program (concept, targets, schedule, budget, coordination, and key design decisions)”
(Sobek, 2000). Similarly, the U.S. aerospace industry requires a program manager who is
administratively and technically skillful and keeps a high level of communication among team
members. In addition to these positions, many engineers actually consider design engineers “to
add the most value.” Since their position must integrate many sources of information into a
specific design, it requires a great deal of talent, experience, and authority. Finally, it is
important to stress that “establishing a strong quality focus requires substantial time and effort
from the leadership team” (Air Force, 1996).
A.3 Tools
Several decades ago, lean began with the use of flexible tools in the Toyota Production System
(Womack and Jones, 1990). In the last few years, a similar transformation is being made in
product development. Software and information technology tools are providing significant leaps
in productivity. For example, the following description of the Boeing 777 program led to a “60
to 90% reduction in rework” from previous airplanes (Condit, 1996).
The 777 was the first Boeing jetliner designed completely on computers…With the use of
interactive graphics, the design teams were able to concurrently release structure,
systems, payloads, and other design features of the aircraft with minimal interference and
related problems. (Condit, 1996)
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Software tools were also used for testing, where they helped conduct thousands of test hours
prior to the rollout of the first 777, and similar technology was used on the two other successful
programs visited. In each case, few expenses were spared to incorporate modern tools, which are
described in this section. This commitment, however, does not necessarily extend beyond these
select programs, and industry managers have suggested that many programs have not yet applied
the new tools that are available.
A.3.1 Information Gathering Tools
“Sometimes the telephone number of the right person to speak with is the most valuable
piece of information you can give out.” – Design Engineer, Site B
Although direct communication is probably the most effective means for gathering information,
the size and complexity of product development requires a host of software tools to facilitate this
means. These tools include product data management systems, information archives, and
communication tools. Their objective is to efficiently provide the right information at the right
time. This is generally accomplished via documenting information in archives and enhancing
communication among team members.
Industry has had some success documenting information in three areas: issue tracking,
engineering skill management, and knowledge retention (Wessels, 2000). Issue tracking
involves linking documents to websites for quicker access, and all of the companies observed
have integrated this capability to some extent. Skill management was less common and involves
the documentation of skills in an effort to retain and promote the best people. Finally,
knowledge retention was the least common, as it employs video and online documentation to
describe detailed designs, processes, and other useful knowledge. In each of these cases, once
the necessary information is documented, it may be retrieved via search engines or hierarchical
structures that provide easy access. This efficient access of information has been employed in
other industries, where, for example, a 75% reduction in cycle time was achieved in automobile
stress analysis (Hammersley, 1999).
Despite the increasing use of documentation to capture knowledge, collaboration remains a more
effective means for transferring knowledge. Miles (2000) suggests that “it is now apparent that
effective knowledge management depends heavily on a company’s ability to collaborate, both
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inside and outside the company.” Burke and Bolf (1986) found that “from a list of 15 sources of
learning, managers most value their peers, their immediate supervisor, other supervisors, and
external publications,” which is inline with related research (Rulke et al, 2000). Finally, Argote
and Ingram (2000) have shown that moving technology and tasks is “more effective when
accompanied by moving people because people are capable of adapting the tools or technology
to the new context.” Thus, an emphasis should be placed on facilitating collaboration rather than
solely relying on documentation to achieve effective knowledge management.
Given the importance of collaboration, many companies have implemented software tools that
assist with communication. For example, one site has introduced virtual collaboration rooms,
where engineers, customers, and suppliers can maintain discussions in real time. Several
managers believe that this is the direction of product development, despite the appearance of
several challenges. For example, some devices offer the capability of sending and receiving
messages from anywhere (including during meetings), creating interference in the working
environment. Similarly, many product development personnel have characterized email as a
constant distraction.
One tool that combines the strengths of documentation and collaboration is the visual
information pull system (VIPS). It was developed by Aerojet to introduce the lean principle of
pull to product development. VIPS is a web-based system that is used to request the completion
of tasks and then tracks their progress. It increases transparency (providing the entire team with
access to the progress of ongoing tasks) and is used to send messages to team members
(facilitating communication). Another advantage of VIPS is its emphasis on specific tasks. This
perspective allows for the introduction of techniques to measure value. For instance, in addition
to schedule-related data, other measures may be kept such as cost and balanced scorecard data.
Thus, tasks may be more directly analyzed for value adding or enabling efforts, as described in
the previous section.
A.3.2 Knowledge Application Tools
During visits, engineers and managers repeatedly characterized computer aided design (CAD)
software as “the single most significant contribution” to increased productivity. The strength of
CAD tools lies in their ability to simplify and automate much of the process. Furthermore, the
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tools provide a visual aid that increases communication. For instance, meetings were observed
where the design was displayed to several team members, who would discuss problems and
suggest changes. This type of collaboration increases understanding, reduces rework, and is
fundamentally changing product development as it becomes more common (see Section 3.4.2).
Similarly, those familiar with manufacturing have credited software technology for reducing
manufacture and assembly time. Software applications have led to increased design for
manufacture (DFM). DFM is “aimed at reducing manufacturing costs while simultaneously
improving (or not compromising) product quality, development time, and development cost”
(Ulrich and Eppinger, 1995). For instance, some tools allow manufacturing to be simulated,
testing for accuracy before actual production. Likewise, other tools allow the assembly to be
simulated to ensure that workers can access all necessary areas of the product. This simulation is
exported to the assembly line to facilitate understanding, while correspondingly helping to
standardize the process. Similarly, other new tools are constantly being introduced to the
product development process. For example, over 35 different stress analysis software packages
are available, with each having its strengths and weaknesses (Hammersley et al, 1999).
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Appendix B: Case Studies of Successful Team Environments
Brief case studies were conducted on the following three teams in order to pool characteristics of
successful team environments. The following teams have had notable success, and thus serve as
model environments.
B.1 “Twelve Days of August,” F-18E/F, Boeing
The first case study is from the F/A-18E/F aircraft development program, where in August of
1991, the program encountered a significant challenge. During the previous nine months,
Northrop, General Electric, and the Navy had been working to define the configuration and high-
level requirements for the E/F. The work, however, had been largely unsuccessful and the result
was “a weapon system that was over weight and over cost” (Springsteen, 1999). To address this
problem, a twelve-day meeting (later called the “Twelve Days of August”) was convened to
create a set of requirements that would not exceed the weight and cost budgets. In other words,
the objective was to accomplish in twelve days what had proved unworkable in nine months.
Many of the problems were the result of a lack of cooperation across functional groups. Each
group desired the best performance, regardless of the impact on the entire aircraft. For this
reason, it was decided to bring together all of the people who were knowledgeable to define the
configuration and requirements (Springsteen, 1999). Over 40 people attended the event,
gathering as a group each morning and evening, and working in functional teams throughout the
remainder of the day. “Over the twelve days they had to trade off weight, fuel, capacity, volume,
materials, the size of the radar cross-section, and cost. Operational analysis was going on
throughout all of this in order to understand what was being gained at a system level with the
changes that the teams were making” (Springsteen, 1999).
The result of this intense effort was a configuration and set of requirements that led to the
production of the F/A-18E/F aircraft. This aircraft won the Collier Trophy and was produced
below cost, on-schedule, and with comparatively superior performance (Cool, 2001). When
interviewed, many participants mentioned that the success of the “Twelve Days of August” was
achieved by bringing together the right people in a distraction free environment.
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B.2 Developing New Products Team, Jet Propulsion Laboratory, NASA
The second case study is from the NASA Jet Propulsion Laboratory, which has often been
considered a world-class designer of unique spacecraft. A problem encountered by engineers at
JPL (and similar to the F/A-18E/F program) is the difficulty in creating the configuration, cost
estimates, and requirements. This process may require as much as two years, which adds
considerable cost to the project. To reduce the cycle time, JPL created the Developing New
Products (DNP) team.
The mission of DNP is to “(1) provide an integrated set of people, processes, and tools which
will enable JPL to rapidly engineer highly advanced space projects, and (2) maintain risk, yet
deliver spacecraft in 1/2 the time and 2/3 of the cost for missions comparable to pathfinder”
(Waltham, 2000). To achieve this goal, DNP uses a common area equipped with several new
software tools that engineers can use to quickly obtain spacecraft configurations, cost estimates
and requirements. The area is isolated from other team members and offers few distractions.
The result is akin to continuous flow, and one successful application reduced cycle time from
two years to two months (a 92% reduction). Although other implementations have had mixed
success, the DNP group has effectively applied several changes to promote communication.
B.3 Mission Control Center, Johnson Space Center, NASA
The final case study was conducted at the Mission Control Center (MCC) of Johnson Space
Center. The MCC (including the old and new versions) have managed numerous missions,
including Mercury, Gemini, Apollo, the Space Shuttle, and the International Space Station. In
regards to mission operations, it is considered a world-class location.
Although the MCC seems unrelated to product development, the reality is that they have much in
common. Both product development activities and the MCC are focused on problem solving.
As each group encounters a problem, resolution is sought via a specific procedure, which
includes design, analysis, and testing activities. The difference between the groups is that the
MCC is faced with considerable time pressure. Problems during space missions often require
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solutions in seconds or minutes, rather than the weeks and months of product development. To
accommodate this emphasis on time, a unique environment has been created.
The environment of the MCC emphasizes rapid communication between knowledgeable
personnel. Over 40 people can occupy the MCC, each assigned to a computer terminal where
they monitor various functions of the mission. These engineers and managers also have separate
offices, thus keeping the MCC clean and orderly. Below the desks, a few manuals are provided,
although the majority of resources are located elsewhere. Given the complexity of most
missions, many of the personnel in the MCC have support teams that are found in similar rooms.
If a problem is encountered, the manager or engineer can direct the problem to their team to
provide a timely solution.
The result of the MCC has been considerable success for many years. For example, many
computer glitches have been quickly fixed on early and recent missions. Extra-vehicular space
walks have been guided by the center, and perhaps the best example is Apollo 13. Most people
are familiar with the timely creation of solutions to fix the series of critical problems that
occurred during that mission. In each case, the procedure for resolving the situation is the same:
bring the right people together, provide them with the right information, and allow them to work
in a distraction free environment.
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Appendix C: Pilot Study of Academic Research
As a pilot study for quantifying value, six graduate students were selected to participate in a case
study involving value in the development of their Masters theses. Surveys were employed to
measure value, which emphasized obtaining initial results that could be analyzed.
C.1 Methodology of Academic Case Study
Importance was placed on using value attributes to gauge student research, since this was
considered an unproven approach for measuring value. However, the procedure for this method
was modified slightly from the industry studies. Rather than the value attributes previously
shown, a new set of attributes of value was created. These attributes include problem definition,
background, discussion, hypothesis, case study, results, industry knowledge gain, advisor
knowledge gain, student satisfaction and student knowledge gain. For each of these, a simple
maturity matrix was created that ranked the tasks from -3 to 3 (more recently defined as 1-5).
Over six weeks, students completed surveys on the value of each task they completed. Once
familiar with the surveys, students typically completed them within 90 seconds. The surveys
resulted in the development of six extensive sets of data, including over 100 tasks. A small
portion of one of these is shown in Figure 1. In addition to the attributes, data on the type of
task, documentation, and time was also collected.
Once the data had been collected, it was analyzed for various characteristics. Three significant
results were discovered that are discussed in the following subsections. First, the data revealed
more precisely how different types of tasks contribute to research. Second, the data could be
used to compare different projects and was especially helpful in illustrating clear differences in
project completion. Finally, the measure for value of tasks was compared against the time spent.
This comparison indicated which tasks provided the most return for the investment.
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Figure C.1: Partial Data Set of Student Research
C.2 Task Value
The initial emphasis can be placed on the value attributes and their evolution through the tasks of
the research process. For example, Figure 2 shows student research at MIT progressing with
time, as portrayed by four types of value. Notice how value is characterized by gradual upward
progress with occasional jumps and plateaus. The objective is to remove as many of the plateaus
as possible. In this example, from 80 to 140 hours, there is a minimal amount of value added to
all four perspectives. This area was explored in more detail. In this case, the plateau was a
combination of three tasks: a work plan to organize the research, several unsuccessful attempts to
phone members of industry, and an unsuccessful literature review. In contrast, a site visit near
the 50th hour proved highly valuable. The student remarked that it sparked the next several
months of research.
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0
10
20
30
40
50
60
0 50 100 150 200
Hours
Val
ue
Product ValueStudent Value
Advisor ValueLAI Value
Figure C.2: Cumulative Value of Student Research
In a similar fashion, different research projects may also be compared. For example, one
essential component of research is a case study. Despite this importance, students have markedly
different success in conducting one. For example, Figure 3 shows the success of each student in
obtaining one. Three of the students did not make any progress during the six weeks of this
study. The other three were making steady progress until of the 70th hour, when they diverged.
From a project management standpoint, this is valuable information that quickly illustrates where
potential problems might lie.
0
510
15
20
25
3035
40
45
0 50 100 150 200
Hours
Val
ue
LindberghDouglas
Armstrongvon BraunEarhart
Trippe
Figure C.3: Comparison of Research Case Studies
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C.3 Time versus Task Value
Another comparison is the amount of time spent on different activities versus the value that they
create. Figure 4 depicts this association between time and three types of values. One immediate
observation is that focused meetings provide a great deal of value, although they do not take up
much time. By spending time as a team and working on a specific problem, a great deal can be
accomplished. Another insight is that presentations require a large amount of time to create, yet
only add value during the actual presentation. In other words, the set-up time is necessary, but
non-value-added. These insights are not new to research, but this structured methodology lends
them new credence.
0%10%20%30%40%
50%
Literat
ure Re
view
Pres
enta
tion
Meetin
g
Site
Visi
t
Model
Focu
sed Mee
ting
Time
Enterprise ValueStudent Value
Advisor Value
Figure C.4: Activity Value Summary
C.4 Results of the Pilot Study
This case study has surfaced several interesting phenomena. Specifically, tasks have been
highlighted that are potentially non-value-added, such as set-up time for presentations. Another
insight is that the progress on a research project can be clearly indicated via indirect measures of
research value. According to the data, one student can be progressing steadily, while another
might be at a standstill. Further research can determine what corrective action is necessary, but
the objective of the study has been accomplished.
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Appendix D: Research Surveys and Definitions
D.1 Informed Consent for Surveys
This survey is designed to characterize three techniques for measuring value in the ProductDevelopment process. This study is part of an on-going research project by a consortiuminvolving the U.S. Air Force, a number of firms in the defense aerospace sector, and theMassachusetts Institute of Technology. The research projects focus on the investigation of theapplication of "Lean" practices in the defense aerospace industry.
Your cooperation is vital to the success of this study! Please answer the questions as they applyto you. Answering of the questions is voluntary. You are not obligated to answer any question. Ifyou are uncomfortable with any question, or feel in any way coerced or pressured intoparticipating in the survey or any part of it, you may decline to answer any or all questions. Yourdecision to decline to answer a question will be treated with the same confidentiality as positiveanswers.
Please be accurate in your responses. We understand that you may have concerns aboutconfidentiality. The survey is intended to be anonymous and several measures will be taken toensure that your responses will remain confidential. Only the researchers named below will haveaccess to the information requested in this survey. All analyses and reviews of the data will bepresented in the form of aggregated statistics. No individuals or individual programs will beidentified in the analysis, reviews, or reporting of the responses. We understand that the successof any research depends upon the quality of the information on which it is based, and we takeseriously our responsibility to ensure that any information you entrust to us will be protected.
Value in Product Development TeamJim Chase
Professor John DeystProfessor Ed GreitzerDr. Hugh McManus
Lean Aerospace InitiativeMIT Room 41-205
77 Massachusetts Ave.Cambridge, MA 02139
Fax: 617-258-7845
Thank you for your participation in this research!
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D.2 Task Survey for Measuring Value (Industry)
Task Survey MIT Research Study
All data is confidential (click here for more info).
Name or initials:
Task Name (or nearest task): [selection of tasks from WBS]
(If task is unique, specify task name:)
Task contributes to (click here for definitions):
Functional performance of end product 5 4 3 2 1 N/A
Definition of processes to deliver product 5 4 3 2 1 N/A
Form of final output 5 4 3 2 1 N/A
Reduction of risks and uncertainties 5 4 3 2 1 N/A
Improvement of tools, processes, skills, etc. 5 4 3 2 1 N/A
Cost and/or schedule savings 5 4 3 2 1 N/A
Enabling other tasks 5 4 3 2 1 N/A
Facilitating communication 5 4 3 2 1 N/A
Employee job satisfaction 5 4 3 2 1 N/A
Other (describe in comments) 5 4 3 2 1 N/A
Direct effort spent on task completion: Hours
Comments:
Submit
Figure D.1: Online Task Survey for Measuring Value (Industry)
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D.3 Original Value Attribute Definitions used in Industry Task Surveys35
V1: Functional Performance of End ProductThe functional performance of the end product to be delivered to the customer Task directly affects the functionality of the end product delivered to the customer. A high scoremeans direct specification of function, or direct specification of form that affects function, e.g.requirements specification, design decisions, or specification of parts, major dimensions,materials, etc. Lower scores might include tasks with minor impact on form and function (e.g.specifying detail dimensions). A "one" score might be used for processes which onlyoccasionally affect form and function (e.g. analyses which may turn up problems but usually donot).
V2: Definition of Processes to Deliver ProductThe definition of processes necessary to deliver the end product to the customer Task directly affects the processes necessary to deliver the end product to the customer. A highscore means direct specification of manufacturing, test, certification, or other downstreamprocesses necessary to deliver the product and have it accepted by the customer. Lower scoresmight include tasks with minor impact these plans or processes; a "one" score might indicateonly a chance of affecting these plans and processes.
V3: Form of Final OutputThe form of the output of this project (e.g. report, build-to-package, etc.) Task directly contributes to the document or information package that will form the output to thecustomer. High scores would include direct contribution to the deliverable documents, e.g.drawings called for in the build-to package. Lower scores might be used for intermediatedocumentation (e.g. internal reports) some of which may form part of the deliverabledocumentation, or which might be used directly to prepare it. A "one" might indicatedocumentation that has only a chance of inclusion in any final product.
V4: Reduction of Risks and UncertaintiesThe reduction of risks and uncertainties Task contributes to eliminating uncertainty in the design or reduces the risk of technical failureor program (cost and schedule) problems. High scores would include direct elimination ofuncertainties (e.g. design decisions that eliminate ambiguities in the design) or direct ruling outof risk factors (e.g. analyses that assure performance and/or rule out suspected failure modes), orplans to handle known risk factors. Lower scores might be used for tasks that address lessimportant risks or address only pieces of a problem (e.g. analyses of non-critical components,partial analyses). A "one" might indicate work that has only a chance of impacting program riskor uncertainty.
35 Originally contributed by McManus (2000b).
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V5: Improvement of Tools, Processes, Skills, Etc.The improvement of tools, processes, technologies or skills relevant to E1-E4 Task contributes to the skill base necessary to do future work, but improving the tools, processesor technologies applied to design processes, and/or the skills of the engineers and others that dothe work. A high score might indicate direct work on development of design tools, training, orcritical technology. A lower score might be used for incremental improvements in methods, orimportant work-experience gained. A "one" might indicate incidental (but not trivial) gains inknowledge or work experience.
V6: Cost and/or Schedule Savings Task saves money and/or cuts schedule time. A high score would indicate that the task directlyresulted in major cost or time savings. A lower score might indicate minor savings, or savings asa byproduct rather than direct result of the task; a "one" might indicate incidental savings, or onlya chance of savings.
V7: Enabling Other TasksEnabling other tasks (e.g. task is required for other tasks to proceed) Task is necessary for other tasks to proceed, even if it does not itself directly contribute to theabove categories of value. Examples include gathering necessary information, getting approvals,set up of models or analyses, meetings to initiate other tasks, etc. A high score would indicatethe task is a critical prerequisite to a major value added task. Lower scores would indicate lowerlevels of criticality (e.g. following tasks could proceed with limitations without this task) oruncertainty (this task is sometimes, but not always, necessary)
V8: Facilitating CommunicationFacilitating necessary communication between tasks and/or employees Task directly aids necessary communication. A high score would indicate direct contribution tofree flow of critical information, e.g. setting up information systems, critical kick-off or othermeetings, communication of critical information from/to customers, etc. Lower scores wouldindicate lower levels of criticality or bandwidth; a "one" might indicate incidental contribution tocommunication.
V9: Employee Job SatisfactionThe employee's own job satisfaction Task is interesting, fun to do, results in increases in skills or positive experience, or otherwisecontributes to job satisfaction. This is necessarily highly subjective. A high score indicatesenjoyment of the task - a good reason to come to work. Lower scores indicate routine work; a"one" or "N/A" score might indicate an undesirable or unpleasant task.
V10: OtherAddresses other aspects of value not covered above (specify briefly in comments) Task performs a necessary or valuable function not covered in the above categories. Examplesmight include contributions to safety, work environment, or environmental impact reduction;satisfying of regulatory or contractual requirements, the following of existing processes, or otherneeds we haven't thought of.
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D.4 Task Survey for Measuring Value (Academia)
Task Survey MIT Research Study
All data is confidential (click here for more info).
Name or initials:
Task Name:
Type of Task: [Lit. Review, Site Visit, Meeting, etc.]
Task contributes to (click here for definitions):
Problem Definition 5 4 3 2 1 N/A
Background 5 4 3 2 1 N/A
Discussion 5 4 3 2 1 N/A
Framework or Hypothesis 5 4 3 2 1 N/A
Case Study or Experiment 5 4 3 2 1 N/A
Contribution to Results 5 4 3 2 1 N/A
Advisor Knowledge 5 4 3 2 1 N/A
Industry Knowledge 5 4 3 2 1 N/A
Student Satisfaction 5 4 3 2 1 N/A
Student Knowledge 5 4 3 2 1 N/A
Direct effort spent on task completion: Hours
Comments:
Submit
Figure D.2: Online Task Survey for Measuring Value (Academia)
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D.5 Survey for Communication in the Aerospace Industry
Communication in the Aerospace Industry MIT Research Study
All data is confidential (click here for more info).
Name (optional):
Position/Title:
Company Name:
Program Area: [Development, Manufacturing, Support, etc.]
On average, how many hours do you work each week? Hours
Please estimate the following information (leave blank if not applicable):
√ Level of Effectiveness √
(1 = not effective, 2 = effective, 3 = very effective)
Technical Work Process Work Team Building
Business Use 1 2 3 1 2 3 1 2 3
Face-to-Face Hrs/wk O O O O O O O O O
Meeting (w/2-5 people) Hrs/wk O O O O O O O O O
Meeting (w/6+ people) Hrs/wk O O O O O O O O O
Telephone Hrs/wk O O O O O O O O O
Teleconference Hrs/wk O O O O O O O O O
Voicemail Hrs/wk O O O O O O O O O
(1 = not effective, 2 = effective, 3 = very effective)
Technical Work Process Work Team Building
Business Use 1 2 3 1 2 3 1 2 3
Instant Messenger Hrs/wk O O O O O O O O O
Memos Hrs/wk O O O O O O O O O
Email Hrs/wk O O O O O O O O O
Mail Hrs/wk O O O O O O O O O
Reading Unpublished Reports Hrs/wk O O O O O O O O O
Reading Published Literature Hrs/wk O O O O O O O O O
Browsing the Web Hrs/wk O O O O O O O O O
Network Other than Web Hrs/wk O O O O O O O O O
On average, how many hours per week do you spend on non-communication-intensive
tasks (or those not listed above)? Hours
Comments:
Submit
Figure D.3: Online Survey for Communication in the Aerospace Industry
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D.6 Definitions for Communication Survey
Technical Work- This aspect of work is the primary function of a job, as outlined by the jobdescription. Each method of communication described below can contribute (effectively or not)to job-related activities. "Not effective" means that this form of communication does noteffectively contribute to completing your job. "Effective" means that this contributes positivelyto completing your job. And, "very effective" means that this form of communication is criticalto the success of your job.
Process Work- This aspect of work relates to the process side of a job. Typically, this consistsof suggestions or mandated changes in how the job is accomplished. For example, a company-wide initiative to change software/hardware applications would fall under this category. Whattypes of communication are effective in contributing to this process? "Not effective" means thatthis form of communication is not helpful or effective in implementing process change."Effective" means this is helpful. And, "very effective" means this form of communication iscritical.
Team Building- This aspect of work relates to the social interaction necessary for a goodworking environment. It is typically very important to be able to communicate effectively withfellow colleagues. What types of communication contribute to this in your environment? "Noteffective" means that this form of communication is ineffective or damaging to building goodteam relationships. "Effective" means this contributes positively, and "very effective" means thisis critical for positive social interaction.
Face-to-Face- This type of communication occurs directly between people and occurs in 2-person meetings or in the daily on-the-job interactions.
Meeting (w/2-5 people)- This communication occurs directly in meetings involving 2 to 5people. These are typically focused meetings that cover a specific subject.
Meeting (w/6+ people)- This form of communication occurs in larger meetings of 6 or moremembers. Includes team meetings, program meetings, and employee meetings.
Telephone- This is communication that involves use of the phone for direct 1-to-1conversations.
Teleconference- This form of communication involves the use of the phone for discussionbetween more than two parties. Often, this might be in concert with a meeting as describedabove. In which case, it is considered a teleconference if the primary discussion occurs over thephone line.
Voicemail- This form of communication is the sending and receiving of voicemail or machinemessages. This includes dialing into the system, sending, and receiving.
Instant Messenger- This type of communication involves the immediate transmission andreception of electronic text. Currently, it is primarily used in personal applications (such as chatrooms), but it can have business applications. Please evaluate it only for business purposes.
Memos- These are common intra-office memos exchanged in the work environment.
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Email- This form of communication is the transmission and reception of electronic messages.Common applications include Eudora, Claris Email, Entourage, and Outlook. Some of these(such as Eudora 5.0 include time statistics).
Mail- This type of communication is characterized by mail from within and outside theorganization. This would not include memos (previously mentioned) or reports that are sent viathe mail.
Reading Reports- This type of communication includes the time necessary to read reports orpapers. This could include a variety of documents, typically considered longer than a memo, butshorter than a book.
Reading Books- This communication consists of the knowledge obtained by reading business-related books during working hours.
Browsing the Web- This type of communication consists of using network browsers (usuallyNetscape & Explorer) to browse the World Wide Web.
Network other than Web- This type of communication consists of applications thatcommunicate with other servers or computers. For example, ERP or more specific applications,such as Configuration Management System (CMS) or the Visual Information Pull System(VIPS), are applications that use network communication to enable job-related activities.
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D.7 Technical Uncertainty Survey
Technical Uncertainty Survey MIT Research Study
All data is confidential (click here for more info).
Name or initials:
Task Name (or nearest task): [selection of tasks from WBS]
(If task is unique, specify task name:)
Please estimate current TPMs shown below (and normalize as appropriate):
[Technical Performance Measure 1] Mean: [units]
Minimum: [units]
Maximum: [units]
[Technical Performance Measure 2] Mean: [units]
Minimum: [units]
Maximum: [units]
[Technical Performance Measure 3] Mean: [units]
Minimum: [units]
Maximum: [units]
Comments:
Submit
Figure D.4: Online Survey for Measuring Technical Uncertainty